Trade agreements need more public and parliamentary scrutiny

By Patricia Ranald

May 1, 2015 — 10.01pm

Public hearings begin on Monday for a Senate Inquiry initiated by the ALP and Greens into Australia's decision-making process for trade agreements. Prompted by controversy over the social impacts of recent bilateral and regional trade agreements, the majority of submissions argue for change to make this process less secretive, more open and to give Parliament rather than cabinet the key role in decision-making.

So what's wrong with the current process? Trade agreements are legally binding on current and future governments but are negotiated in secret. Trade agreements used to deal mainly with trade in goods and reductions in tariffs. But now agreements like the Trans-Pacific Partnership deal with a wide range of other domestic laws and policy that affects our daily lives. These proposals are driven by global corporations that want regulation that suits their interests but is not necessarily in the interests of Australians. In the current TPP negotiations, we know from leaked documents that pharmaceutical companies want stronger patents on medicines, which would delay the availability of cheaper generic medicines. Media companies want longer copyright payments, restrictions on internet use and less data privacy. Food, alcohol and tobacco companies want to influence government regulation of food, tobacco and alcohol labelling.

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All of these corporations want special rights for foreign investors to sue governments for damages in an international tribunal if they can argue that a change in law or policy harms their investment, known as Investor-State Dispute Settlement. The Philip Morris tobacco company is currently using ISDS in an obscure Hong Kong-Australia investment agreement to sue our government for billions of dollars in compensation for plain packaging legislation, despite the fact that it was passed with bipartisan support through Parliament and the Australian High Court found they were not entitled to compensation under Australian law. There are increasing numbers of ISDS cases against health, environmental and even minimum wage regulation. These policy issues would normally be decided through public democratic parliamentary processes. They should not be traded off behind closed doors.

The current Australian process for trade agreements is a cabinet process, not a public process of the whole Parliament. Cabinet manages the negotiations, and the text is secret until the Prime Minister and cabinet ministers make the decision to sign the agreement. After signing it becomes public and is reviewed by a parliamentary committee, but the text cannot be changed. Parliament can only vote on the implementing legislation for those aspects of the text that require immediate legislative change.

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This is unacceptable, because many aspects of trade agreements that limit future government action do not require legislation. For example, legislation is not required for ISDS, which is contained in the text of the agreement, nor for other commitments in the text that might limit future government action. Constitutional legal experts such as Professors Geoffrey Lindell and George Williams agree there is no constitutional barrier to Parliament making the decision on the whole text, before formal signing by the cabinet, as occurs in the Westminster systems of Britain and Ireland.

There are also growing numbers of examples of public release of trade agreement texts before signing. Since 2003, World Trade Organisation draft texts have been placed on the WTO public website. The Anti-Counterfeiting Trade Agreement text was released in 2011 before it was signed. The EU is negotiating a Transatlantic Partnership with the US, and agreed in January 2015 to release the final negotiated text publicly and to the European Parliament before it is signed.

Many submissions to the inquiry have recommended an end to secrecy and a greater role for Parliament in the trade agreement process: So how would it work?

The trade minister should report to Parliament before trade negotiations begin, with an assessment of potential costs and benefits to Australia. Parliament should decide whether to enter trade negotiations, and define clear benefits to be obtained. There should be widespread community consultation during negotiations, including reports to Parliament. The final text of the agreement should be released for public and parliamentary discussion before it is signed, and subject to a public and independent evaluation to determine whether it is in the national interest.

Following this evaluation, Parliament should first vote on the whole text of the agreement to determine if it is in the national interest, or if changes should be made, and, if approved, refer it to cabinet for formal signing. If the agreement is approved, Parliament should then vote on any legislation needed to implement it.

Dr Patricia Ranald is a Research Associate at the University of Sydney and co-ordinator of the Australian Fair Trade and Investment Network.